6 Brazilian Stocks to Buy at the Bottom

The stock markets in emerging countries have underperformed lately, and that has started to create some potential buying opportunities - especially if prices continue to drop. Brazil has a booming economy supported by high oil prices, a growing middle class, plus lots of construction and other projects due to the 2016 Olympic games. It could be time to start accumulating shares in these names on any further dips. These all have low PE ratios, strong balance sheets and solid dividend yields in some cases. Here are the six companies:

Brasil Telecom SA (BTM) is trading at about $23.49. Brasil Telecom is one of the leading telecommunications companies in Brazil. These shares have traded in a range between $16 to $24.29 over the past 52 weeks. The 50 day moving average is $23.21 and the 200 day moving average is $20.26. BTM earnings estimates are about $3.53 per share in 2011. This puts the PE ratio at about 7, which is very reasonable. The dividend is just over $1 per year which results in a yield of about 5%. This stock is in the upper end of the trading range so I would wait for a pullback to about $21.

Banco Santander (NYSE:BSBR) shares trade at just over $12 per share. Banco Santander is a major bank based in Brazil. These shares have traded in a range between $9.82 to $15.66 over the past 52 weeks. The 50 day moving average is $12.45 and the 200 day moving average is $12.51. BSBR earnings estimates are about $1.03 per share in 2011. This puts the PE ratio at about 12. The dividend is about 26 cents per year, which results in a yield of 2%. These shares have been trending lower but appear to have strong support around $11, which is where I would be buying.

Fibria Celulose SA (NYSE:FBR) shares have been trending lower, and trade at $14.40 per share. Fibria Celulose is a major manufacturer of pulp and paper products. These shares have traded in a range between $13.67 to $23.33 over the past 52 weeks. The 50 day moving average is $15.52 and the 200 day moving average is $16.17. FBR earnings estimates are about 80 cents per share in 2011 and $1 for 2012. Because these share are trading well below the 50 and 200 day moving average, I would wait for signs of a bottom perhaps around $12.

Gafisa SA (NYSE:GFA) shares are trading around $12.59 per share. Gafisa is a major homebuilder based in Brazil. These shares have traded in a range between $10.04 to $18.24 over the past 52 weeks. The 50 day moving average is $13.25 and the 200 day moving average is $14.16. The fact that GFA shares are trading below these moving averages indicates GFA shares are in a downtrend, so I would wait for signs of a bottom. GFA earnings estimates are about $1.27 per share in 2011. The Brazilian government recently announced housing budget cuts, which is putting pressure on homebuilder stocks like GFA. This is another reason to wait for these shares to drop further. Read about the budget cuts here.

Itau Unibanco Holding SA (NYSE:ITUB) shares are trading around $22.85 per share. Itau is a major bank based in Brazil. These shares have traded in a range between $16.33 to $26.30 over the past 52 weeks. The 50 day moving average is $22.67 and the 200 day moving average is $22.14. ITUB earnings estimates are about $1.98 per share in 2011.

Gerdau SA (NYSE:GGB) is trading at about $13.81. Gerdau is one of the leading steel producers based in Brazil. These shares have traded in a range between $11.49 to $17.99 over the past 52 weeks. The 50 day moving average is $13.92 and the 200 day moving average is $13.60. GGB earnings estimates are about $1.62 per share in 2011. This puts the PE ratio at about 8, which is very reasonable.

Overall these names make sense to watch now and patiently wait for signs of a bottom and/or additional pullbacks.

The data is sourced from Yahoo Finance. The information and data is believed to be accurate, but no guarantees or representations are made.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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